Rogue trader likely to be freed by French court
French rogue trader Jerome Kerviel is expected to be freed on bail when he appears in court today as part of the initial criminal investigation into his €4.9bn fraud.
His lawyer Christian Charriere-Bournazel said preliminary charges against Kerviel were likely.
He also said he was “convinced” that the 31-year-old trader, who who has spent the weekend in police custody, would be released while the judicial probe continues into bank Societe Generale’s stunning losses.
Under French law, preliminary charges mean the judge has ruled there is strong evidence to suggest involvement in a crime. It gives the investigator time to pursue the probe before deciding whether to send the suspect for trial or drop the case.
Finance Minister Christine Lagarde said it still appears that Kerviel acted alone.
Chief executive Daniel Bouton said the bank, thought by some experts to be vulnerable to a takeover, has not been approached by any bidder.
He rejected suggestions from Kerviel’s lawyers that Societe Generale was using Kerviel to hide big losses linked to the US subprime mortgage crisis.
“How could you want to imagine that we would have been able to hide a hole by another hole? It’s completely stupid,” he said.
Societe Generale alleges that he hacked computers and “combined several fraudulent methods” to build up positions worth €50bn more than the bank’s market worth.
Jean-Pierre Mustier, head of the bank’s corporate and investment banking arm, said yesterday that Kerviel appeared to have acted alone, but added: “I cannot guarantee to you 100% that there was no complicity.” He also said Kerviel’s motive was unclear.
Even before the massive fraud was exposed last week, Kerviel’s trading apparently triggered occasional alarms at Societe Generale – France’s second-largest bank – but not to a degree that led managers to investigate further. Kerviel had explained away the red flags as mistakes, according to Mr Mustier.
Since his deals greatly exceeded the amount of capital he was allowed to risk, Kerviel entered fake and offsetting trades in Societe Generale’s computer system that appeared to minimise the odds of big losses, the bank said.
The bank said Kerviel used other people’s computer access codes, falsified documents and used other methods to cover his tracks – helped by his previous experience in other offices at the bank that monitor traders.
